San Diego's top defense contractors: Who's up?

Last year was a good one for San Diego defense contractors. They secured $9.3 billion in contracts, up from the $8.5 billion the year before. While the hike is welcome — and is the third year in a row that it has increased — the total is still below the $11.5 billion San Diego companies got in 2012.

However, there’s no mistaking the power of the local defense industry, the nation’s second largest recipient of defense procurement dollars, trailing only the defense companies clustered in and around Fairfax, Va.

“With the largest concentration of military assets in the world, San Diego’s robust defense ecosystem has grown to include more than 5,600 contractors collectively employing 62,000 people and spanning nearly every major industry,” it said.

But while there may be 5,600 contractors, a handful employ the bulk of those 62,000 people. In fact, the top ten contractors account for almost 66 percent of the contracts in 2017.

General Atomics, which led all area contractors with $2.6 billion in awards in 2017, employs more than 5,000 in San Diego and close to 10,000 overall.

Our City estimated its economic impact on the region at $1.3 billion a year, highest among all defense contractors, and enough to place it eighth on our list of the most important companies to the San Diego region.

Its Aeronautical Systems group builds remotely piloted aircraft systems, including the Predator A, the Gray Eagle and the Predator C Avenger. Those contracts make up $800 million of the $2.6 billion in 2017.

General Atomics made a heady climb from the year before, when it got $1.5 billion in contracts. It normally leads all San Diego companies except for last year when Northrup Grunman led the pack with $1.7 billion.

With a $1.1 billion economic impact on the region, it placed 10th among the most important businesses.

For contracts, Northrup Grunman was second in 2017, with 130 contracts for $1.4 billion. Northrup Grunman also manufacturers unmanned aircraft, such as Global Hawk, Tritan BMS and Fire Scout.

Defense manufacturers continue to reap the lion’s share of the contracts, securing more than two-thirds of defense contracts awarded to the region in 2017. Aircraft manufacturers and ship builders had 53 percent of all contract awards.

Third on this year’s list for contracts was General Dynamics NASSCO, with $1039 million. The shipbuilder placed No. 16 on our list of the most important businesses, with an economic impact estimated at $797 million.

It was one spot behind Viasat, the satellite company, which placed 15th on our list of Most Important Businesses. Viasat saw a drop in contract value, getting $370 million in 2016 and falling to $240 million this past year. Still, that ranked the company sixth overall when it came to defense contracts awarded and Our City ranked it higher than NASSCO, even though its economic impact was less at $725 million.

Another shipbuilder, BAE, finished fourth in defense contracts in 2017, with $417 million. In 2016, it received a similar amount, with $406 million. It placed No. 18 on our list of the most important businesses, with an estimated $1 billion economic impact.

Cubic Global Defense got $126 million last year in contracts, compared to the $68 million it received the year before. But 2013 was a heady time for the company. It got $165 million that year. Cubic was ranked 17th on our list of Most Important Businesses, with an economic impact estimated at $747 million.

Straub Construction was the only defense contractor to make the top 10 list for contract value that did not make our list of the most important companies. The general contractor was awarded $138 million in primarily airfield structures. It had less than $50 million in 2016 and employs only 80 people.

Not surprising, given its presence in San Diego, the Navy continues to be the biggest funder of contracts, awarding between 44 and 55 percent of them since 2012. In 2017, that number was 49 percent.

The study is the first such study of a regional defense industry’s might and reach. It was part of the Propel San Diego initiative, a Department of Defense funded grant initiative awarded to the City of San Diego. The grant also helped create an interactive website tool, SanDiego.DoDspend.com, that shows which local companies are securing these key federal contracts, among other features.

“San Diego is a military town at its core. Our innovation economy has been continually shaped and strengthened by the local defense ecosystem, and this report and web tool further prove it,” said Mark Cafferty, president & CEO, San Diego Regional EDC.

“With increased visibility of defense contractors, large and small, San Diego can continue to remain competitive amid changing budget priorities.”